Kinder Morgan Inc. closed the $310 million acquisition of Kinetrex Energy, marking the Houston-based pipeline operator’s entry into the renewable natural gas (RNG) market.
“We are very pleased to be adding Kinetrex Energy’s business to the full suite of energy solutions and services that Kinder Morgan has to offer customers,” commented Jesse Arenivas, president of Kinder Morgan’s Energy Transition Ventures group, in a company release on Aug. 20.
Based in Indianapolis, Kinetrex is the leading supplier of LNG in the Midwest and a rapidly growing player in producing and supplying RNG. Kinder Morgan previously announced the acquisition from an affiliate of Parallel49 Equity in July.
The deal follows the formation in March of Kinder Morgan’s Energy Transition Ventures group, which has been tasked with identifying commercial opportunities emerging from the low-carbon energy transition.
“We’re confident that additional RNG opportunities will continue to emerge in the near term and deliver attractive returns to our shareholders,” Arenivas added in the Aug. 20 release.
At time of closing, the Kinextrex portfolio included two small-scale, domestic LNG production and fueling facilities, a 50% interest in a landfill-based RNG facility in Indiana, and signed commercial agreements for three additional RNG facilities with construction to begin shortly.
As the three new RNG facilities become operational over the next 18 months, Kinder Morgan previously said in July that it expects the investment made through its acquisition of Kinetrex to be accretive to its shareholders with the purchase price and additional development capex representing less than six times expected 2023 EBITDA.
The company will continue operations as Kinetrex Energy, a Kinder Morgan company. Additionally, key members of Kinetrex’s management team, including President and CEO Aaron Johnson, were expected to join Kinder Morgan as part of the acquisition to pursue new projects that expand its RNG platform.
Parallel49’s Fund V acquired Kinetrex in December 2016. Under Parallel49 ownership, Kinetrex completed a significant expansion into landfill-based RNG production that transformed Kinetrex into a leading alternative energy company, the firm said in a separate release on Aug. 24.
Further, the investment in Kinetrex generated a “tremendous” outcome for the firm’s investors, according to Jonathan Dries, managing director at Parallel49, which is based in Lake Forest, Ill..
“The transaction represents the largest multiple of invested capital on a single investment in our firm’s 25-year history,” Dries commented in the release. “We could not be more pleased with this incredible result.”
J.P. Morgan Securities LLC was the exclusive financial adviser to Kinetrex Energy in connection with the transaction.
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